Leading quote:
“UK political tensions aren’t helping matters for the pound, as the rally for the euro against it on the day shows” — Stephen Gallo, European head of forex strategy at the Bank of Montreal.

“But the elephant in the room right now is China, and the potential role of its currency in the trade dispute. The bounce in the dollar against the renminbi during the second half of the Asian session is the main focus in forex, and this has spilled over into the European trading day.”

Hot topics:
The pound is falling after comments from US president Donald Trump suggesting the UK’s current Brexit plans would forestall a bilateral trade deal, highlighting the currency’s exposure to politics.

Sterling is at an 8-session low, down 0.7 per cent at $1.3112, sending it towards the $1.3050 it hit in June, which came as a 7-month nadir. Worries that Theresa May’s agreement with her cabinet on the UK’s preferred terms of departure from the EU face a rebellion from proponents of a hard Brexit have deepened during Mr Trump’s visit.

Against the euro, the pound is 0.3 per cent weaker, with £0.8863 required for a unit of the shared currency.

Forex:
The run lower of China’s renminbi continues to set the tone across currency markets as investors watch for signs that the authorities will tolerate its weakness as a tool in the trade dispute. The onshore version of it is 0.5 per cent stronger at Rmb6.6973 per dollar.

The wider trend for a stronger dollar remains in place, with the index tracking the world’s reserve currency up 0.2 per cent overall.

The euro is down 0.3 per cent at $1.1642.

Equities:
Stocks are higher in Europe and Asia, and Wall Street is expected to make further gains, as global indices keep their poise as investors look beyond the trade tensions between the US and China.

US earnings season will test the wider improving mood, with second-quarter revenue from JPMorgan up 6 per cent year-on-year and stronger than forecast, helping its stock up 1.6 per cent in pre-market trade.

London’s FTSE 100 is up 0.7 per cent and marginally outperforming its European peers as the pound weakens. Frankfurt’s Xetra Dax 30 is up 0.4 per cent and the international Stoxx 600 is up 0.3 per cent.

The S&P 500 is expected to rise 0.2 per cent, having ended at a five-month high overnight. The Nasdaq Composite is set to add to its record close reached overnight, with a 0.3 per cent rise.

Tokyo led in Asia as the Topix index climbed 1.2 per cent. Hong Kong’s Hang Seng ticked up 0.2 per cent. The CSI 300 index of equities listed in Shanghai and Shenzhen rose 0.4 per cent.

Commodities:Brent crude is down 1 per cent at $73.70 as the previous session’s recovery falters. The international oil marker is now almost 6 per cent weaker over the week, although off its low of $72.67 hit on Thursday when concern about the impact of the trade dispute on Chinese demand was at its deepest.